WASHINGTON (AP) \u2014 Lori Shelton can\u2019t fathom ever having the money to buy a home \u2014 and that\u2019s a major reason why so many voters feel down on the economy ahead of this year\u2019s presidential election.<\/p>\n\n\n\n
Shelton, 67, drives an Uber to help pay rent in Aurora, Colorado. An advance on her pay covered her apartment\u2019s security deposit. But it also cut into her next paycheck, leaving her bank account dangerously low when the rent was due \u2014 a cycle that never seems to end.<\/p>\n\n\n\n
\u201cI\u2019m always one step behind,\u201d said Shelton, her voice choking up. \u201cIt\u2019s a nightmare, it\u2019s a freaking nightmare right now.\u201d<\/p>\n\n\n\n
The United States is slogging through a\u00a0housing affordability crisis<\/a>\u00a0that was decades in the making. At the root of this problem: America failed to build enough homes for its growing population. The shortage strikes at the heart of the American dream of homeownership \u2014 dampening President Joe Biden\u2019s assurances that the U.S. economy is strong and underscoring the degree to which\u00a0Republican Donald Trump, the former president and presumptive GOP nominee for 2024, has largely overlooked the shortage.<\/p>\n\n\n\n The lack of housing has caused a record number of renters to devote an excessive amount of income to housing, according to a\u00a0Harvard University analysis<\/a>. Not enough homes are for sale or being built, keeping prices elevated. Average mortgage rates have more than doubled and further worsened affordability.<\/p>\n\n\n\n In fact, the Census Bureau reported that homeownership fell slightly at the end of last year in an otherwise solid economy. If it wasn\u2019t for shelter costs, inflation \u2014 Biden\u2019s most pronounced economic problem \u2014 would be running at a healthy and stable 1.8%. Instead, it\u2019s hovering around 3.2%.<\/p>\n\n\n\n Administration officials are confident that shelter inflation will soon cool, but the damage across several years is apparent to advocates and economists.<\/p>\n\n\n\n \u201cI\u2019ve been doing housing work for 30 years \u2014 the housing affordability challenge is the worst I\u2019ve ever seen in my career,\u201d said Shaun Donovan, a former secretary of Housing and Urban Development in the Obama years who now leads the nonprofit Enterprise Community Partners.<\/p>\n\n\n\n Donovan noted that this is an increasingly bipartisan challenge that could bring the political parties together. Expensive housing was once the domain of Democratic areas such as New York City and San Francisco. It\u2019s now moved into Republican states as places such as Boise, Idaho, grapple with higher prices.<\/p>\n\n\n\n \u201cIt is a first-tier issue almost everywhere,\u201d he said. \u201cAnd that is changing the national politics around it in a way that I think is quite different than I\u2019ve ever seen.\u201d<\/p>\n\n\n\n Mark Zandi, chief economist at Moody\u2019s Analytics, said that the outcome of the November election could ultimately depend on the path of 30-year mortgage rates.<\/p>\n\n\n\n Rates currently average about 6.74%.<\/a> If they dropped closer to 6%, the odds of a Biden victory would increase. But rates moving near 8% might enable Trump to prevail, Zandi said.<\/p>\n\n\n\n \u201cGiven the current housing affordability crisis, higher rates will make owning a home completely out of reach for nearly all potential first-time homebuyers,\u201d he said. \u201cSince homeownership is a key part of the American dream, if it appears unattainable, this will deeply impact voters\u2019 sense of the economy.\u201d<\/p>\n\n\n\n Biden, a Democrat, acknowledged the pain many are feeling in his State of the Union address earlier this month and in his budget proposal released on Monday.<\/p>\n\n\n\n The president wants to fund the building and preservation of 2 million housing units \u2014 a meaningful sum, but not enough to solve the shortage. He also proposed a tax credit worth up to $10,000 to homebuyers. Over the past three years, he has increased rental assistance to 100,000 households.<\/p>\n\n\n\n \u201cThe bottom line is we have to build, build, build,\u201d Biden said Monday in a speech to the National League of Cities. \u201cThat\u2019s how we bring down housing costs for good.\u201d<\/p>\n\n\n\n Rapidly climbing home prices were also a festering problem under Trump, who first achieved celebrity status as a real estate developer. While president, Trump called for limiting construction in the suburbs. He claimed during the 2020 election that Biden\u2019s policies to spur building and affordability would \u201cdestroy your neighborhood.\u201d<\/p>\n\n\n\n During the 2018 to 2020 years of Trump\u2019s presidency, the country\u2019s housing shortage surged 52% to 3.8 million units, according to the mortgage company Freddie Mac.<\/p>\n\n\n\n The Associated Press contacted Trump\u2019s campaign for his policy plans but did not get a response. The America First Policy Institute, a think tank promoting Trump\u2019s vision, said the key is to cut government borrowing to reduce mortgage rates. The former president has pledged to reduce deficits, but an analysis by the Committee for a Responsible Federal Budget shows that his policies in office will have likely added\u00a0more than $8 trillion to the national debt.<\/a><\/p>\n\n\n\n \u201cThe best way for us to improve access to homeownership for young people is to get interest rates back down, not to provide subsidies that cause housing unaffordability to worsen,\u201d said Mike Faulkender, chief economist at the institute.<\/p>\n\n\n\n Lower rates might play well with voters, but most economists say they would at best offer temporary financial relief. Purchase prices would likely adjust upward in response to greater demand from falling rates.<\/p>\n\n\n\n